Singapore (Reuters): South Asia’s edible oil imports are set to climb to an all-time high this year as lower production in the region coincides with rising consumption to drive buying of mainly palm and soybean oils from elsewhere, industry officials said.
As the region’s per capita income grows, households are able to buy more products containing vegetable oils. Ahead of a key industry conference in Kuala Lumpur next week, estimates from leading industry officials showed India, the world’s biggest vegetable oil buyer, is expected to purchase 15.5 million tons in the current marketing year to October 2018.
That would mean a 2.9% rise from 15.06 million tons imported a year earlier - the previous record - because of a decline in soybean and rapeseed production this year due to adverse weather. Imports are set to make up two-thirds of India’s edible oil demand, estimated this year at around 23 million tons.
“Our (national) soybean production was lower at around 8.3 to 8.4 million tons as against 10.6 million tons last year,” said B.V. Mehta, executive director of the Solvent Extractors’ Association of India, a Mumbai-based national edible oil trade body.
“We expect a decline in rapeseed production as well. Rapeseed farmers have shifted to other crops such as wheat and chick peas for better returns,” the official said.
Mehta estimated the country’s winter-planted rapeseed output at 6.33 million tons, compared with 6.5 million tons a year ago.
The additional demand for vegetable oils stems in large part from growing household incomes in India, Asia’s third-largest economy.
“The government has raised (import) duties to protect farmers, but we will continue to buy higher volumes because of lower domestic production and rising consumption,” said Sandeep Bajoria, chief executive of vegetable oil importer Sunvin Group. Bajoria will attend the Price Outlook Conference in Kuala Lumpur as part of the Indian delegation.
Palm oil futures traded on the Bursa Malaysia Derivative Exchange have risen 2.6% in February after declining for the last three months, driven by rising demand.
India primarily imports palm oil from Indonesia and Malaysia and soyoil from Argentina and Brazil. It also buys sunflower oil from Ukraine and canola oil from Canada.
Giving the breakdown of India’s imports, Sunvin’s Bajoria estimated the country will buy 9.8 million tons of palm oil in the current marketing year, 3.1 million tons of soybean oil, 2.3 million tons of sunflower oil and 300,000 tons of canola oil.
Neighbouring Pakistan’s edible oil purchases are forecast by Rasheed Janmohammed, former chairman of Pakistan Edible Oil Refiners Association, to climb 6.7% to a record of 3.2 million tons in 2018 from 3 million tons a year before.
But the growth in imports of edible oil is expected to be slower as the country buys more oilseeds, resulting in increased supply of domestically produced vegetable oil.
The country’s edible oil imports rose in 2017 rose 15% from 2.6 million tons in 2016.
“Pakistan is taking more soybeans and canola seeds for the local crushing industry,” said Janmohammed.
Meanwhile Bangladesh is forecast to import 2.35 million tons of mainly palm and soybean oils in 2017/18, up 9.3% from 2.15 million tons a year ago, according to the U.S. Department of Agriculture (USDA).
Sri Lanka’s vegoil purchases, mainly palm oil, are estimated to rise to 210,000 tons this year, up from 200,000 in 2016/17, according to USDA estimates.